Which of the Following Is NOT Correct

question 154

Multiple Choice

Which of the following is NOT correct?

• A) The cost of equity is the return that equity investors require on their investment in the firm.
• B) The cost of equity can be found by either the dividend growth approach or the SML approach.
• C) The cost of debt is the return that lenders require on the firm's debt.
• D) If the firm has preferred stock in its capital structure, the cost of preferred stock should be included in the cost of capital.
• E) Book value capital structure weights should be used to calculate the WACC rather than market value weights.

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Definitions:

Square Root Re-Expression

This term is the process of rewriting an expression or equation by taking the square root of its terms, often used in mathematical transformations.

Company's Assets

Resources owned by a company, regarded as having value and available to meet debts, commitments, or legacies.

Re-Expression

The process of transforming data through mathematical operations to make it meet certain assumptions or improve interpretability.

Histogram

A type of bar graph that represents the distribution of numerical data by showing the number of data points that fall within specified ranges of values.